Complaint from south Huntsville civic group member causes state agency to question Housing Authority

View full sizeDave Dieter / The Huntsville TimesMichael Lundy, executive director of the Huntsville Housing Authority, speaks at a City Council meeting earlier this year.

HUNTSVILLE, AL -- Two civic groups in south Huntsville continue to question the efforts of the Huntsville Housing Authority, and complaints from one of those groups has led a state agency to pose some questions of its own.

The state inquiry may threaten the amount of federal stimulus dollars headed to Huntsville for the authority's newest project, a $17 million senior apartment complex being built alongside Huntsville Hospital.

"With people trying to kill the program, I am concerned about it," said Michael Lundy, executive director of the Housing Authority. But he also said on Thursday that work continues on schedule and he expects no major setbacks.

At issue is Gateway Place, a three-story complex for elderly residents of public housing. Although the project isn't being built in south Huntsville, a member of Huntsville Community Rights has objected to the price, sending a letter last month that earned the attention of the Alabama Housing Finance Authority.

"The reason I'm interested in Gateway Place is it is being funded with federal dollars. And I'm a taxpayer," said letter writer Dee O'Malley, calling the construction cost of roughly $200,000 per apartment "incomprehensible" in Huntsville.

Huntsville Community Rights is one of two civic groups launched in south Huntsville last spring after the authority bought Stone Manor Luxury Apartments, creating the city's first permanent public housing complex south of Airport Road.

O'Malley's two-page letter complains that the authority is spending $6 million on soft costs above actual construction and that the authority could better use the $17 million to find space for more than 2,000 people in Huntsville waiting on public housing.

Perhaps more significantly, O'Malley's letter also asserts that the authority didn't fill out its state application correctly, failing to fully disclose the total cost of the project.

"It's really kind of mind-boggling to me," said Lundy on Thursday. "Usually when you have these kinds of projects brought to a community they are celebrated."

The Alabama Housing Finance Authority is providing $9.8 million of the total for Gateway Place. That's federal stimulus money the state agency is handing out in lieu of low-income tax credits.

But the agency says the stimulus money might now be reduced.

Gateway Place also relies on $500,000 in federal money through the city, a $100,000 grant from Wachovia, $700,000 from the authority's own capital funds and $5.7 million in grants from the U.S. Department of Housing and Urban Development.

The authority's application for stimulus dollars, sent last in March of 2009 and available online, didn't mention some of that, including the $5.7 million from HUD.

After O'Malley pointed this out in her letter, the authority received a letter from the state asking for five items, including a revised cost estimate, a revised source of funds, and an itemized list of the costs to be covered by HUD grants.

"This change in the financing structure will require that AHFA re-underwrite the project and may reduce the amount of Tax Credit Exchange Program funds allocated to this project," warns the letter from Haywood Sport, an administrator with the state finance authority.

Contacted by The Times this week, the state agency provided the following statement, in full: "AHFA has requested additional information from the Huntsville Housing Authority to comply with our allocation plans and this process is still ongoing."

Lundy said the authority has been attacked with misinformation and has done nothing improper. Lundy said he has since been able to show the state agency that the authority did indeed disclose the full costs. He declined to provide such paperwork for The Times.

"They had some questions," said Lundy. "We don't expect that there is a problem."

O'Malley's letter also points out that one of the authority's own board members, Dick Fountain, has publicly questioned a seeming conflict of interest in the project. The developer, Aslan, rated the bidders and chose a Florida contractor, Faver Gray, that is partly owned by the developer.

O'Malley acknowledged on Thursday that she did not know about the local Housing Authority before the purchase of Stone Manor. Today, she is one of several members of both Huntsville Community Rights and the South Huntsville Civic Association who continue to monitor authority activities.

"We need public housing; we need housing for the elderly," said O'Malley. "I'm just trying to get it down to a cost basis that makes sense."

Lundy said if Huntsville doesn't get the federal stimulus or grant money, another city would. "I just feel like the complaints are not justifiable," he said.